When word gets out about your recent inheritance or windfall, you may find yourself in some precarious positions with friends and relatives. Long lost cousins and friends of friends may find themselves on your doorstep with their hands held out. It can be tough to set boundaries and say no, but it will be an important lesson to learn as you navigate life with your newfound wealth.
It is possible to be generous and help others while not giving or lending money. The main focus is to preserve your relationships and your net worth.
Here are some tips to find other ways to help:
1. Do not give them cash. People who struggle with money tend to make bad decisions, which is how they got where they are in the first place. Giving them cash only provides them more opportunity to make more poor decisions.
2. Give them food. A meal, a bag of groceries and even gift cards to restaurants are great ways to provide true sustenance and show you care.
3. Help with transportation. With the rising price of gasoline, helping out with a fill-up, a gas card, bus tickets or other modes of travel can also be very helpful for those in need. Even paying for car insurance directly to the insurance company or repairs and maintenance directly to the mechanic shows your generosity and willingness to help.
4. Pay Rent, Mortgage, or Utilities. Paying these items either as a one-off or on a schedule helps to provide appropriate living arrangements without giving out spending cash that can be used for other things and leave these important bills unpaid. Be sure to communicate your intentions clearly. If you only plan to pay for a pre-determined time period, make sure the recipient is clearly aware of these parameters. You do not want someone to rely on you for living arrangements indefinitely.
5. Provide financial coaching. Help your family member learn to work on a budget, find ways to earn more income and pay bills on time. This falls in line with the old adage, if you give a man a fish, he eats for a day. If you teach a man to fish, he eats for a lifetime. Financial education can be life transforming.
The bottom line is to communicate you care while setting strict boundaries. Being transparent, consistent and firm with friends and family asking for money helps preserve relationships and your wealth. For more information on wealth planning including gifting strategies and asset preservation techniques, contact the experienced estate planning attorneys at Stouffer Legal in the Greater Baltimore area. You can schedule an appointment by calling us at (443) 470-3599, emailing us at office@stoufferlegal.com, or register for an upcoming free webinar using the link below:
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